How Firms Price

What Will Accounting Cost Me?

You have probably noticed by now that most accountants don’t list pricing on their websites. Why is that? The truth is that pricing a client is one of the hardest and time-consuming things we do. In the accounting world there are two main philosophies that accountants us to price… by the hour and fixed.

By the Hour

This type of pricing is one of the oldest pricing models in the accounting industry. In the by the hour model, each person in a firm from staff to partners is given a per hour charge. This means the bill to the client will be the number of hours (often rounded to the nearest tenth of an hour) spent by each level of staff times the hourly rate.

Pros:

Don’t pay for time that wasn’t spent on your account

Easy to add new projects or services

Cons:

You don’t know what your monthly bill will be each month

No motivation for firm to be efficient and timely

Hourly rates can vary by education level, position in the accounting firm, and services provided. In general, we have seen the following rates for outsourced accounting and bookkeeping services:

Bookkeeper: $15-$60/hr

Staff Accountant: $60-$120/hr

Accounting Manager: $100-$200/hr

CPA Partner: $200-$250/hr

Fixed Pricing

Many accountants have moved from the hourly billing to a fixed pricing model. In the fixed pricing model, a set monthly price is given based on the services that are requested. These fixed costs can be based on an estimate of time and resources as well as how complicated a project may be. This means you get a bill each month for the same price. This type of billing is often riskier for the accounting firm, as they have to understand and know all the factors of a project to accurately give a fixed price.

Pros:

Always know what your bill will be

Motivation for the firm to be efficient and timely in getting

Cons:

Each new project requires you to go back to the agreement and re-price

Could be paying for time that isn’t necessary.

Fixed rates can vary based on the project, transaction volume, reporting requested, etc. We have seen fixed rates for services from $100 – $2,500 depending on the services agreed upon.

Each accounting firm has their own pricing models. Many use some sort of hybrid between the hourly billing and the fixed price models. So what you should expect to see when pricing out accounting services depends on what you need and the firm’s pricing philosophy.